No End in Sight for Iran War

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Luke Vargas (0:33)

There's no end in sight to the Iran War, as Pete Hegseth extends deployments to the Middle East.

Jared Malsin (0:39)

There's a lot of physical and psychological pressure, especially on sailors, members of the US. Navy, who are spending a long time at sea. And I think what we're going to see is probably more strain on those forces as a result.

Luke Vargas (0:56)

Plus, we'll look at what that means for energy prices going into the winter heating season, and Russia gains the upper hand in Ukraine with a barrage of new drones. It's Thursday, September 3rd. I'm Luke Vargas for the Wall Street Journal, and here is the AM Edition of What's News, the top headlines and business stories moving our world today.

Defense Secretary Pete Hegseth is extending the deployments of American troops in the Middle East well into 2027, part of an open-ended strategy that seemed giving President Trump options for how and whether to continue the conflict. US officials say that Trump has discussed declaring the war over, but has also told aides that he thinks an economic pressure campaign, which includes a blockade of Iranian ports, will eventually force the regime to collapse. Journal Middle East correspondent Jared Malsin told me that so long as the US wants to keep that option on the table, the military will need to be close by.

Jared Malsin (1:51)

It is a military operation. The blockade does involve, number one, redirecting ships that try to run the blockade. And they're also shooting at some of these ships. When ships don't comply with the Navy and their orders to steer away from Iran, they shoot at these ships and they disable them. And sometimes those can be deadly strikes. There are thousands of sailors and soldiers involved, along with many warships, helicopters that are involved in policing the blockade. And for all of that to have an effect, it has to go on long enough for it to bite.

Luke Vargas (2:26)

In a letter to families, Pentagon leaders said they understood that the longer tour would weigh heavily on military households.

Well, the prospect of an extended war in the Middle East is bad news for consumers, with oil and natural gas prices set to rise going into the winter heating season. That's being compounded by a lack of gas in storage, with countries unable to buy cheaper natural gas earlier in the year, as energy reporter Matt Dalton explains.

Matthew Dalton (2:52)

Prices are lowest coming out of the winter and into the spring, even in the summer. And so you can buy cheaply, then you can avoid buying more expensively in the winter when prices are much higher, when European gas demand peaks. And so now that pricing structure wasn't there. In fact, the price for delivery in the summer was more expensive than the price for delivery in the winter. So that gas is going to be more expensive than people were anticipating. And that is going to flow through eventually into household heating bills and electricity prices.

Luke Vargas (3:23)

And while that may remind some listeners of the energy crisis following Russia's invasion of Ukraine, Matt says that Europe has become more resilient since then.

Matthew Dalton (3:31)

The continent's demand for natural gas is about 20% lower than it was then. The reason is Europe built a lot of renewables, which lowers gas needed for power generation. A lot of factories have become more energy efficient. So that reduces demand and also households have turned down the thermostat.

So for all those reasons that could ameliorate the crisis, then we also have new LNG export capacity coming online from the US. The US is now the world's largest LNG exporter, and those facilities will put new supply into the market and help keep prices down. They won't be able to replace the production lost from Qatar, but they certainly will help.

Luke Vargas (4:12)

Another potential factor is the prospect of an exceptionally warm and stormy winter. The World Meteorological Organization this morning said that El Nino has now become firmly established in the tropical Pacific and is expected to strengthen significantly. The WMO is forecasting that the coming months we'll see an increased risk of floods in some places, drought in others, and additional extreme heat globally.